High-tech engineering firm ITT Corp has announced plans to separate into three independent publically traded companies. The New York-based firm intends to execute tax-free spin-offs of its water-related technology business and its defense and information…
High-tech engineering firm ITT Corp has announced plans to separate into three independent publically traded companies. The New York-based firm intends to execute tax-free spin-offs of its water-related technology business and its defense and information solutions operations, thereby leaving its highly engineered solutions division as a standalone company.
While the proposal requires customary regulatory approval, including the receipt of an IRS tax ruling, it does not require a shareholder vote. To that end, the ITT board of directors expects to finalise and execute the plan, under which ITT stockholders would own shares in all three corporations, before the end of the year.
ITT’s chairman, president and CEO, Steve Loranger, commented: “In today’s business environment, we believe this strategy is the best approach to unlock value and position the three businesses to grow and serve customers as focused global companies. Each new company will be more nimble and able to build stronger, more intimate customer relationships to accelerate mutual success.”
Following the completion of the spin-off, ITT Corporation will operate as a diversified manufacturer of highly engineered industrial products, including aerospace valves and electromechanical actuators and switches for space programs. The unit’s pro forma 2011 revenue is estimate at US$2.1bn.
The water technology company will comprise three of ITT’s current businesses, Residential & Commercial Water, Flow Control and Water and Wastewater. ITT estimates that the new company’s pro forma 2011 revenue will be approximately US$3.6bn.
Finally, ITT’s Defense & Information solutions segment will be renamed and rebranded as a standalone company consisting of its existing businesses, including networked communications, space-based satellite imaging, GPS-based positioning and navigation and imaging systems. This unit includes ITT Geospatial Systems which is contracted to build the imaging payload for both the GeoEye-1 and WorldView-3 satellites. The pro forma 2011 revenues for this business are estimated at US$5.8bn.
Each corporation will have its own independent board of directors and each will be listed on the NYSE. ITT added that all three companies are expected to have a capital structure, balance sheet and financial policies consistent with maintaining investment grade ratings.
